Paying for your child's degree

Should they get a student loan?
A student loan is money paid out to students to help them pay for living costs. The loans are managed by the Student Loans Company. As they are not commercial loans, they are one of the cheapest ways to borrow money.

The maximum amount of loan your child can get is £5050 if they study in London, and don't live with their family. For students who live away from home but study outside of London, they can receive up to £4095. Whether your child gets the full amount of student loan depends on your income and the amount of maintenance grant they get. All full-time students are entitled to 75% of their student loan, regardless of their parents' income.

It does sound like a lot of money, but students don't have to pay it back until they are earning above a certain salary. At the moment, if they never earn more than £15,000 a year, then they will never have to pay back the loan. Repayments depend on the amount graduates earn, so it should always be affordable.

So, is it all worth it?
Well, with tuition fees and student loans your child may well finish their education with a substantial amount of debt as well as a degree. However, in the long run it probably is worth helping your kid continue in education.

The difference in earning power between a graduate compared to that of someone who didn't go to higher education is increasing all the time: people with higher education qualifications, on average, earn 50% more than those without. So your child should be able to pay back their student debts, thanks to their degree. If they never earn very much, then they won't have to pay back the money.

Useful information

www.dfes.gov.uk: Visit the Department for Education and Skills website to find your Local Education Authority.

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